ALBA WALDENSIAN INC, SC 14D9, 1999-11-12

ALBA WALDENSIAN INC
SC 14D9, 1999-11-12
KNITTING MILLS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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SCHEDULE 14D-9

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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934

ALBA-WALDENSIAN, INC.
(NAME OF SUBJECT COMPANY)

ALBA-WALDENSIAN, INC.
(NAME OF PERSON(S) FILING STATEMENT)

COMMON STOCK, $2.50 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)

012041109
(CUSIP NUMBER OF CLASS OF SECURITIES)

GLENN J. KENNEDY
CHIEF FINANCIAL OFFICER, VICE PRESIDENT, TREASURER AND SECRETARY
ALBA-WALDENSIAN, INC.
POST OFFICE BOX 100
201 ST. GERMAIN AVENUE, SW
VALDESE, NORTH CAROLINA 28690
(828) 879-6500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)

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WITH A COPY TO:

J. NORFLEET PRUDEN, III
KENNEDY COVINGTON LOBDELL & HICKMAN, L.L.P.
100 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28202-4006
(704) 331-7442

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ITEM 1. SECURITY AND SUBJECT COMPANY.

The name of the subject company is Alba-Waldensian, Inc., a Delaware
corporation (the "Company"). The address of the principal executive offices of
the Company is Post Office Box 100, 201 St. Germain Avenue, SW, Valdese, North
Carolina 28690. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 ("Schedule 14D-9")
relates is the common stock, par value $2.50 per share (the "Common Stock") of
the Company.

ITEM 2. TENDER OFFER OF THE BIDDER.

This Schedule 14D-9 relates to a tender offer (the "Offer") by AWS
Acquisition Corp. ("Purchaser"), a Delaware corporation and a wholly-owned
subsidiary of Tefron U.S. Holdings Corp. ("Parent"), a Delaware corporation and
wholly-owned subsidiary of Tefron Ltd. ("Tefron"), a corporation organized under
the laws of the State of Israel, to purchase all of the issued and outstanding
shares of Common Stock (the "Shares") at a purchase price of $18.50 per Share
(the "Offer Price"), net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
November 12, 1999 and the related Letter of Transmittal (which, together with
the Offer to Purchase, as amended or supplemented from time to time, constitute
the "Offer") all as described, provided for or referred to in the Tender Offer
Statement on Schedule 14D-1 and Schedule 13D, dated as of November 12, 1999 (the
"Schedule 14D-1") filed by Purchaser and Parent. Neither Purchaser, its
subsidiaries, or any of its affiliates are affiliated with the Company.

The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of November 8, 1999, by and among Parent, Purchaser and the Company (the
"Merger Agreement"), a copy of which is being filed with the Securities and
Exchange Commission as Exhibit 1 to this Schedule 14D-9 and is incorporated
herein by reference. Pursuant to the Merger Agreement, following the
consummation of the Offer, and upon the terms and conditions contained in the
Merger Agreement and in accordance with the relevant provisions of the Delaware
General Corporation Law (the "DGCL"), Purchaser will merge with and into the
Company (the "Merger"), and the Company will be the surviving corporation and a
wholly-owned subsidiary of Parent. At the effective time of the Merger, each
Share then outstanding (other than Dissenting Shares (as defined in
Section 3.1(d) of the Merger Agreement)) and Shares owned by the Company,
Purchaser or Parent will be converted into the right to receive in cash, without
interest, the Offer Price per Share paid in the Offer.

As set forth in the Schedule 14D-1, Purchaser's and Parent's principal
executive offices are located at c/o Tefron, Ltd., 28 Chida Street, Bnei-Brak,
51371, Israel.

ITEM 3. IDENTITY AND BACKGROUND.

(a) The name and business address of the Company, which is the person
filing this Schedule 14D-9, is set forth in Item 1 above. All information
contained in this statement or incorporated herein by reference concerning
Purchaser, Parent or their respective officers, directors, representatives or
affiliates, or actions or events with respect to any of them, was provided by
Parent, and the Company takes no responsibility for such information.

(b)(1) The election and designation of directors to the Board of Directors
of the Company (the "Board"), as provided for in the Merger Agreement, is
subject to Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which requires the Company to mail to its stockholders an
Information Statement (the "Information Statement") containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Information Statement is attached hereto as Annex I, is filed as
Exhibit 2 to this Schedule 14D-9, and is incorporated herein by reference.
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its executive officers, directors or affiliates,
including certain arrangements between the Company and certain executive
officers, are described in Annex I hereto under the headings "Security Ownership
of Certain Beneficial Owners and Management," "Information About Directors and
Designees for Director," and "Executive Officer Compensation."

(b)(2) Reference is made to: (i) the Merger Agreement, a copy of which is
filed as Exhibit 1 to this Schedule 14D-9 and is incorporated herein by
reference; (ii) the Support Agreement dated November 8, 1999 among Purchaser,
Parent, Clyde Wm. Engle, GSC Enterprises, Inc. and Nathan H Dardick (the
"Support Agreement"), a copy of which is filed as Exhibit 3 to this
Schedule 14D-9 and is incorporated

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ITEM 3. IDENTITY AND BACKGROUND.--(CONTINUED)

herein by reference; (iii) the Integration Consulting/Noncompetition Agreement
dated November 8, 1999 between Parent and Clyde Wm. Engle, a copy of which is
filed as Exhibit 4 to this Schedule 14D-9 and is incorporated herein by
reference (the "Engle Integration Consulting/Noncompetition Agreement");
(iv) the Integration Consulting/Noncompetition Agreement dated November 8, 1998
between Parent and Nathan H Dardick, a copy of which is filed as Exhibit 5 to
this Schedule 14D-9 and is incorporated herein by reference (the "Dardick
Integration Consulting/Noncompetition Agreement" and, together with the Engle
Integration Consulting/Noncompetition Agreement, the "Integration Consulting/
Noncompetition Agreements"); (v) the Confidentiality Agreement dated August 25,
1999 between Tefron and the Company, a copy of which is filed as Exhibit 9 to
this Schedule 14D-9 and is incorporated herein by reference (the "Tefron
Confidentiality Agreement"); and (vi) the sections captioned "Introduction,"
"8. Certain Information Concerning the Company," "11. Background of the Offer;
Purpose of the Offer; the Merger Agreement; the Support Agreement; the
Consulting Agreements; Appraisal Rights; Plans for the Company" and
"13. Dividends and Distributions" contained in the Offer to Purchase which is
filed as Exhibit 6 hereto and which information is incorporated herein by
reference.

The Merger Agreement provides that the Company shall use commercially
reasonable efforts to cause each outstanding option to purchase Shares (an
"Option") granted under the Company's 1993 Long Term Performance Plan and 1997
Nonqualified Stock Option Plan for Directors, whether or not then vested or
exercisable, to be cancelled as of the effective time of the Merger, or, if
Parent shall elect, promptly following the consummation of the Offer, in
exchange for (i) in the case of an Option for which the exercise price is less
than $18.50 per share, an amount equal to the product of (a) the excess of
$18.50 over the exercise price of the Option and (b) the number of Shares
covered by such Option and (ii) in the case of an Option for which the exercise
price is in excess of $18.50 per share, an amount equal to the product of (a)
$0.50 and (b) the number of Shares covered by such Option. Options for an
aggregate of 150,753 Shares are outstanding under the 1993 Long Term Performance
Plan at option prices ranging from $2.31 to $20.44 per Share, representing an
aggregate consideration of $1,798,470 that would be paid to option holders for
such cancellation (of which $1,341,705 would be paid to executive officers of
the Company). Options for an aggregate of 37,000 Shares are outstanding under
the 1997 Nonqualified Stock Option Plan for Directors at option prices ranging
from $2.50 to $20.44 per Share, representing an aggregate consideration of
$383,750 that would be paid to directors of the Company for such cancellation.

Except as set forth in this Item 3(b)(1) and (2), to the knowledge of the
Company, there are no material contracts, agreements, arrangements or
understandings and no actual or potential conflicts of interest between the
Company or its affiliates and (i) the Company's executive officers, directors or
affiliates; or (ii) Parent, Purchaser or their respective executive officers,
directors or affiliates.

ITEM 4. THE SOLICITATION OR RECOMMENDATION.

(a) Recommendation of the Board of Directors

The Board has unanimously approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, and
determined that the Offer and the Merger are fair to, and in the best interests
of, the Company and its stockholders. Accordingly, the Board unanimously
recommends that all holders of Shares accept the Offer and tender their Shares
pursuant thereto. A letter to the stockholders of the Company communicating the
Board's recommendation is filed as Exhibit 7 hereto and is incorporated herein
by reference.

(b) Background of the Transaction.

In June 1999, the Company received an unsolicited indication of interest
from another party in pursuing a possible business combination with or
acquisition of the Company. The Company advised the interested party that it
would be willing to further discuss such a transaction. The Company obtained a
confidentiality agreement from the interested party, provided it with
information for the purpose of its consideration of such a transaction, and
commenced discussions with such interested party.

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ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED)

In August 1999, the Company also received an indication of interest from
Tefron in pursuing a possible business combination with or acquisition of the
Company. After further discussions, on August 25, 1999 representatives of the
Company and Tefron met in Chicago at which time the Company entered into the
Tefron Confidentiality Agreement with Tefron and provided information to Tefron
for purposes of its consideration of such a transaction. Additionally,
representatives of the Company met with representatives of Tefron in New York on
August 30, 1999 and discussed a possible transaction. Such meetings and
discussions were reported to the Board at its meeting held September 1, 1999.

Representatives of the Company also had further discussions with the other
interested party during August and September 1999. Those discussions indicated
that the other interested party was interested in pursuing an acquisition of the
Company at a price per share that was greater that that indicated by Tefron at
that time (but which was less that the Offer Price ultimately agreed to by
Tefron), and that the other interested party was eager to move quickly to
conduct its due diligence investigations of the Company and negotiate a
definitive agreement for such a transaction.

The Board held a special meeting on September 17, 1999 at which it was
advised of the discussions to date with Tefron and the other interested party.
At that meeting, the Board discussed the process by which it would consider a
possible transaction with the other interested party, and established a Special
Committee of the Board (the "Special Committee"), consisting of Nathan H
Dardick, Paul Albritton, Jr., Michael R. Stroll and William M. Cousins, Jr.,
none of whom are officers or employees of the Company, to consider a possible
transaction with the other interested party, negotiate the terms thereof, make
an independent determination whether such transaction was in the best interests
of the Company's stockholders, and make recommendations to the full Board with
respect thereto. The Special Committee was also authorized to engage a financial
advisor and independent counsel.

The Special Committee first met on September 21, 1999. At that meeting, the
engagement of Sachnoff & Weaver, Ltd. as special independent counsel to the
Special Committee was approved. The Special Committee also approved certain
matters concerning negotiations with the other interested party and its due
diligence investigations, including granting an exclusivity period through
October 22, 1999 for the other interested party to complete its investigations
and to present and negotiate a definitive purchase agreement, in accordance with
authority granted by the full Board at its September 17, 1999 special meeting.

The Special Committee held subsequent meetings on September 27, October 1,
October 12, and October 20, 1999 to discuss the status of negotiations with and
due diligence investigations by the other interested party. At its October 12
meeting, the Special Committee authorized the engagement of William Blair &
Company, L.L.C. ("William Blair & Company") as financial advisor.

The other interested party conducted its due diligence investigations and
continued discussions with the Company during the remainder of September and
through the exclusivity period. At the end of the exclusivity period, the other
interested party requested an extension in order to conduct further
investigations and also indicated that it was unwilling to proceed with a
transaction at the price per share it had originally indicated.

The Special Committee met again on October 25, 1999. At that meeting, the
Special Committee discussed the status of the negotiations with and
investigations by the other interested party and, based upon that status and the
indication that the other interested party was unwilling to proceed with a
transaction at the price originally indicated, determined (i) not to recommend
extending the exclusivity period and (ii) to terminate discussions with the
other interested party.

Mr. Dardick, the Chairman of the Special Committee, also reported that,
after the expiration of the exclusivity period with the other interested party,
Tefron had been in contact with him and had expressed continuing interest in a
transaction with the Company. Tefron's financial advisor, Credit Suisse First
Boston, also contacted the Company on October 25 and the Company sent to Credit
Suisse First Boston documents to permit Tefron to commence due diligence
investigations.

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ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED)

On October 27, 1999, representatives of Tefron visited the Company's
headquarters and plant in Valdese. The Company also held a regularly-scheduled
meeting of the Board at Valdese on that date. At its meeting, the Board
discussed the status of negotiations and due diligence and authorized the
Special Committee to consider a possible transaction with Tefron. Certain
members of the Board later met with the Tefron representatives and discussed a
possible transaction.

Discussions between Mr. Dardick, on behalf of the Special Committee, and
representatives of Tefron continued through the remainder of the week, and
Tefron indicated that it would be willing to offer $18.50 per share to acquire
the Company, subject to satisfactory completion of its due diligence
investigations. The Company continued to provide information to Tefron, and
representatives of Tefron visited the Company's Rockwood, Tennessee facilities
on October 29.

Discussions continued during the week of November 1, 1999, during which
Tefron's accountants and consultants visited the Company's facilities. On
November 1, Tefron's counsel delivered drafts of the Merger Agreement, Support
Agreement and Integration Consulting/Noncompetition Agreements to the Company,
its counsel and counsel to the Special Committee. Negotiations concerning those
documents continued through the week.

On November 2, 1999, in response to an unusually high volume of trading in
the Common Stock, the Company issued a press release announcing that "it is
currently engaged in discussions with an interested party concerning the
possible acquisition of the Company by such party. No definitive agreement has
been reached, and there can be no assurance that these discussions will result
in a transaction. The Company expects to make no further comments until such
time as a definitive agreement is reached or discussions are terminated."

During the course of the discussions with Tefron, Mr. Dardick was in
contact with the other interested party. The other interested party indicated a
willingness to pursue a transaction at the price per share it had originally
indicated (which was less than the Offer Price), but expressed no interest in
offering a higher price.

Negotiations continued on Saturday, November 6, and Sunday, November 7,
1999, by which time the parties had reached substantial agreement on the
documents and the terms of the Offer and the Merger and related matters. Drafts
of the Merger Agreement, the Support Agreement and the Integration
Consulting/Noncompetition Agreements were delivered to the members of the Board
on Saturday, November 6.

The Special Committee met by telephone conference call on Sunday evening,
November 7, 1999, at which meeting Mr. Dardick reported on the status of the
proposed transaction with Tefron, William Blair & Company made a presentation as
to its analysis of the fairness of the proposed transaction to the Company's
stockholders from a financial point of view and the Special Committee reviewed
the terms and conditions of the proposed transaction. After discussion and
deliberation, the Special Committee determined to recommend the proposed
transaction to the full Board.

The full Board met by telephone conference call immediately after the
meeting of the Special Committee. At the meeting of the Board, the Special
Committee presented its recommendation, William Blair & Company made a detailed
presentation as to its analysis of the fairness of the proposed transaction to
the Company's stockholders from a financial point of view, and Company counsel,
Kennedy Covington Lobdell & Hickman, L.L.P., discussed the principal terms of
the Merger Agreement, the Support Agreement and the Integration
Consulting/Noncompetition Agreements. After discussion and deliberation, the
Board unanimously approved the Offer and the Merger, approved the Merger
Agreement and related documents, and determined to make the recommendation set
forth in Item 4 (a) above.

The Merger Agreement, the Support Agreement and the Integration
Consulting/Noncompetition Agreements were executed and delivered on Monday
afternoon, November 8, 1999 and the Company and Tefron issued a joint press
release announcing the transaction.

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ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED)

In reaching its conclusions and recommendations described above, the Board
considered a number of factors, including the following:

(i) The Board's familiarity with the business, financial condition,
results of operations, current business strategy and future prospects of
the Company, the nature of the markets in which the Company operates, the
Company's position in such markets, the Company's capital needs and
resources, and the strength of the Company's management team.

(ii) The terms and conditions of the Merger Agreement, including the
price to be paid in the Offer and the Merger and the fact that such
consideration is all cash.

(iii) The historical and recent trading price of the Shares and the
fact that the Offer and the Merger will enable the holders of the Shares to
realize a substantial premium over recent market prices and over prevailing
prices for most of the past five years. In particular, the Board noted that
the Offer Price of $18.50 per share represents a premium of 64% over the
closing price per share of $11.25 on October 27, 1999 (the day before the
Company announced that it was engaged in merger discussions) and that the
trading prices had not exceeded $15.00 per share since July 1999 and had
generally declined since that time, trading as low as $8.50 per share. The
Board also considered whether it was reasonable to expect the trading
prices of the Shares to approach the Offer Price within the foreseeable
future.

(iv) The presentation of William Blair & Company at the November 7,
1999 Board meeting and the written opinion of William Blair & Company dated
November 8, 1999 (the "Fairness Opinion"), to the effect that, as of the
date of the opinion, the consideration to be received by the holders of
Shares (other than Messrs. Engle and Dardick and Tefron and their
respective affiliates) pursuant to the Offer and the Merger is fair from a
financial point of view to such stockholders. The full text of the Fairness
Opinion which sets forth the procedures followed, the factors considered
and the assumptions made by William Blair & Company is attached hereto as
Annex II, is filed as Exhibit 8 to this Schedule 14D-9, and is incorporated
herein by reference. Stockholders of the company are urged to read the
Fairness Opinion carefully.

(v) The fact that Parent's and Purchaser's obligations under the
Merger Agreement to consummate the Offer and the Merger are not subject to
a financing condition and that Tefron is required under the Merger
Agreement to provide sufficient funds to Parent and Purchaser so that they
can meet their payment obligations under the Merger Agreement.

(vi) The facts that (a) the Merger Agreement permits the Company,
under certain circumstances, to furnish information to and negotiate with
third parties and terminate the Merger Agreement upon the payment to Parent
of a $3 million fee and the reimbursement of expenses up to $1.8 million,
and (b) the Board believed that such payments and the existence of the
Support Agreement (i) would not preclude a more attractive offer for the
Company and (ii) were required by Tefron in order to secure a transaction
that the Board believed to be in the best interests of stockholders and
superior to any alternative proposals which had been received by the
Company.

(vii) The Support Agreement, pursuant to which each of Clyde Wm. Engle
and Nathan H Dardick (the "Major Stockholders") is obligated, until such
time as the Merger Agreement is terminated, among other things, (a) tender
to Purchaser the Shares beneficially owned by such Major Stockholder which
would result in Parent and its affiliates owning a majority of the
outstanding Shares, (b) grant to certain officers of Parent or Purchaser an
irrevocable proxy to vote the Shares beneficially owned by such Major
Stockholders, and (c) vote all shares owned by such Major Stockholders in
favor of the Merger Agreement and against any other action or agreement
which could potentially impede, interfere with, delay, postpone or attempt
to discourage the Merger or the Offer.

(viii) The possible interest of other bidders in acquiring the
Company, the price and other terms and conditions contained in the
expressions of intent of such other bidders and the timing and likelihood
of actually consummating a transaction with any such potential bidders. In
this

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ITEM 4. THE SOLICITATION OR RECOMMENDATION.--(CONTINUED)

connection, the Board considered the likelihood of any potential bidders
with whom it had not been in contact having an interest in a transaction at
a price as favorable as the Offer Price or on terms as favorable as
presented by the Offer. The Board also noted that since the Company's
announcement on November 2, 1999 that it was engaged in discussions
concerning the possible acquisition of the Company, no inquiries or
indications of interest concerning alternative proposal had been made to
the Company that was superior to the Offer.

(ix) The fact that the other prospective purchaser with whom the
Company had been engaged in discussions had indicated interest in a
transaction which was not as favorable to the stockholders of the Company
as was the transaction presented by Tefron.

(x) The Company's prospects if it were to remain independent, the
risks and benefits inherent in remaining independent, and whether the
Company would have access to the capital resources needed to compete in the
Company's industry.

(xi) The process by which the Merger Agreement and proposed
transactions were considered and negotiated, including the establishment,
operation and recommendation of the Special Committee. The Board considered
the fact that Mr. Engle, the Company's Chairman, and Mr. Dardick, Chairman
of the Special Committee, would be parties to their respective Integration
Consulting/Noncompetition Agreements and each would receive consideration
for his consulting services and noncompetition covenant in the aggregate
amount of $300,000 for Mr. Engle and $150,000 for Mr. Dardick, payable in
three equal installments, the first upon the completion of the Offer, the
second upon consummation of the Merger, and the third on March 31, 2001.
The Board also considered the facts that (a) Messrs. Engle and Dardick,
unlike other stockholders, were required to enter into the Support
Agreement, which includes a provision requiring them to cede to Parent any
incremental value of their Shares resulting from a superior offer under
certain circumstances, (b) Messrs. Engle and Dardick, unlike other
stockholders, are obligated to provide integration consulting services and
are prohibited from engaging in competitive activities, and (c) Messrs.
Engle and Dardick are the Major Stockholders, the consideration they will
receive under their respective Integration Consulting/Noncompetition
Agreements will be relatively insignificant in light of the consideration
they will receive for their Shares in the Offer, and they therefore have a
substantial interest in obtaining the best possible price for the Shares.

The Board did not assign relative weights to the foregoing factors or
determine that any factor was of particular importance. Rather, the Board based
its position and recommendations on the totality of the information presented to
and considered by it. In addition, individual members of the Board may have
given different weight to different factors.

ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.

The Company retained William Blair & Company as its financial advisor in
connection with the Offer and the Merger. Pursuant to the terms of the
engagement, the Company has agreed to pay William Blair & Company a total fee of
$150,000, as well as reimburse it for all out-of-pocket expenses reasonably
incurred in connection with the engagement. In addition the Company has agreed
to indemnify William Blair & Company against certain liabilities, including
liabilities arising under the federal securities laws. Except as set forth
above, neither the Company nor any person acting on its behalf currently intends
to employ, retain or compensate any other person to make solicitations or
recommendations to stockholders of the Company on its behalf with respect to the
Offer.

ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.

(a) Other than the purchase of Shares upon the exercise of outstanding
Options, no transactions in the Common Stock have been affected during the past
60 days by the Company, or to the best of the Company's knowledge by any
affiliate or subsidiary of the Company, or any executive officer or director of
the Company.

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ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.--(CONTINUED)

(b) To the best knowledge of the Company, all of the Company's executive
officers, directors and affiliates that own Shares currently intend to tender
their Shares pursuant to the Offer.

ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.

(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any of its subsidiaries; (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries; (iii) a
tender offer for or other acquisition of securities by or of the Company; or
(iv) any material change in the present capitalization or dividend policy of the
Company.

(b) Except as set forth in Item 3(b)(1) and (2) and Item 4 herein, there
are no transactions, Board resolutions, agreements in principle or signed
contracts in response to the Offer which relate to or would result in one or
more of the matters referred to in Item 7(a) above.

ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.

(a) Section 203 of the Delaware General Corporation Law

As a Delaware corporation, the Company is subject to Section 203
("Section 203") of the Delaware General Corporation Law. Under Section 203,
certain "business combinations" between a Delaware corporation whose stock is
publicly traded or held of record by more than 2,000 stockholders and an
"interested stockholder" are prohibited for a three-year period following the
date that such a stockholder became an interested stockholder, unless (i) the
corporation has elected in its original certificate of incorporation not to be
governed by Section 203 (the Company did not make such an election), (ii) the
transaction in which the stockholder became an interested stockholder or the
business combination was approved by the board of directors of the corporation
before the other party to the business combination became an interested
stockholder, (iii) upon consummation of the transaction that made it an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also officers or
held in employee benefit plans in which the employees do not have a confidential
right to tender or vote stock held by the plan) or (iv) the business combination
was approved by the board of directors of the corporation and ratified by
66 2/3% of the voting stock which the interested stockholder did not own. The
term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an "interested stockholder,"
transactions with an "interested stockholder" involving the assets or stock of
the corporation or its majority-owned subsidiaries and transactions which
increase an "interested stockholder's" percentage ownership of stock. The term
"interested stockholder" is defined generally as a stockholder who, together
with affiliates and associates, owns (or, within three years prior, did own) 15%
or more of a Delaware corporation's voting stock. In accordance with the Merger
Agreement and Section 203, the Board approved the Offer and the Merger and the
purchase of the Shares in connection therewith and, therefore, the restrictions
of Section 203 are inapplicable to the Offer and the Merger.

(b) Article 13 of the Company's Charter

Article 13 of the Company's Certificate of Incorporation, as amended,
requires the affirmative vote of the holders of at least 80% of the issued and
outstanding Common Stock to authorize, approve or adopt certain transactions,
including a merger, with a "Substantial Stockholder." A "Substantial
Stockholder" is defined generally as a person or entity owning of record or
beneficially, or having the right to acquire, more than 5% of the issued and
outstanding Common Stock. The application of Article 13 to a transaction, such
as the Merger, may be avoided if the entire Board approves the transaction. The
Board has unanimously approved the Merger and specifically determined that
Article 13 shall not apply to the Merger.

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ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.--(CONTINUED)

No appraisal rights are available in connection with the Offer. If the
Merger is consummated, however, stockholders of the Company who have not
tendered their Shares will have certain rights under the DGCL to dissent and
demand appraisal of, and to receive payment in cash of the fair value of, their
Shares. Stockholders who perfect such rights by complying with the procedures
set forth in Section 262 of the DGCL ("Section 262") will have the fair value of
their Shares (exclusive of any element of value arising from the accomplishment
or expectation of the Merger) determined by the Delaware Court of Chancery and
will be entitled to receive a cash payment equal to such fair value from the
surviving corporation. In addition, such dissenting stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares. As a consequence, the fair value determined in any appraisal
proceeding could be more or less than the consideration to be paid in the Offer
and the Merger.

Pursuant to the terms of the Merger Agreement the Company will give Parent
(i) prompt notice of any written demands for appraisals of the Shares received
by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to any such demands. Further, the Merger Agreement
provides that the Company will not, without the prior written consent of Parent,
voluntarily settle or compromise any such demands.

(d) Hart-Scott-Rodino Antitrust Improvements Act of 1976

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), certain acquisition transactions may not be consummated unless
specific information has been furnished to the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") and the Federal Trade
Commission (the "FTC") and certain waiting period requirements have been
satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is
subject to such requirements. Pursuant to the Merger Agreement each of the
Company and Parent has undertaken to promptly file their respective required
Notification and Report Forms (the "Forms") with the Antitrust Division and the
FTC. The statutory waiting period applicable to the purchase of Shares pursuant
to the Offer will expire at 11:59 P.M., New York City time, on the fifteenth day
after Parent files its Form, unless early termination of the waiting period is
granted or Parent receives a request for additional information or documentary
material prior thereto. If such a request for additional information is made,
the waiting period will be extended until 11:59 P.M., New York City time, on the
tenth day after substantial compliance by Parent with such request. Thereafter,
such waiting periods can be extended only by court order. There can be no
assurance that the waiting period will be terminated early or that it will not
be extended due to a request for additional information. The Antitrust Division
and the FTC frequently scrutinize the legality under the antitrust laws of
transactions. At any time before or after the consummation of any such
transaction, the Antitrust Division or the FTC could, notwithstanding
termination of the waiting period, take such action under the antitrust laws as
either deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of
the Shares so acquired or divestiture of substantial assets of Parent or the
Company. Private parties may also bring legal actions under the antitrust laws.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made, or if such a challenge is made, what the results will be.

(e) Purchaser's Designation of Persons to be Elected to the Board

The Information Statement attached hereto as Annex I is filed as Exhibit 2
to this Schedule 14D-9 and is incorporated herein by reference and is being
furnished in accordance with Rule 14f-1 under the Exchange Act in connection
with the possible designation by the Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board other than at a
meeting of the Company's stockholders.

(f) Effect of Transaction on the Company's Credit Agreement

8
<PAGE>

ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.--(CONTINUED)

The Company's credit agreement with its principal lender includes covenants
that the Company shall not "enter into any merger or consolidation" or "enter
into any transaction outside the ordinary course of the [Company's] business,"
and also provides that the occurrence of a "Change of Control" (which includes
the acquisition by any person of the right to vote a majority of the Common
Stock) constitutes an event of default. Therefore, the purchase of a majority of
the outstanding Shares pursuant to the Offer, as well as the Merger, will
constitute events of default under the credit agreement. The execution and
delivery of the Merger Agreement and the execution and delivery of the Support
Agreement (pursuant to which Parent acquired the right to vote a majority of the
Shares, subject to the terms of pledge agreements covering some of those Shares)
may also constitute events of default under those provisions. The Company is
requesting its lender to waive any events of default resulting from the
execution and delivery of the Merger Agreement and the Support Agreement,
pending completion of the Offer or, if also agreed to by the lender,
consummation of the Merger. The Company anticipates that Parent will cause the
Company's existing indebtedness to be refinanced in connection with the
completion of the Offer or the consummation of the Merger; however, there is no
financing condition to the Offer or the Merger.

(g) See also Item 4(b) "Background of the Transaction".

ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.

<TABLE>
<S> <C>
Exhibit 1 Agreement and Plan of Merger dated November 8, 1999 by and among Tefron U.S. Holdings
Corp., AWS Acquisition Corp. and Alba-Waldensian, Inc. (incorporated by reference to
Exhibit (c)(1) to the Schedule 14D-1)
Exhibit 2 Information Statement required to be filed by Alba-Waldensian, Inc. under
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder (included as
Annex I hereto)*
Exhibit 3 Support Agreement dated November 8, 1999 among Tefron U.S. Holdings Corp., Clyde Wm.
Engle, Nathan H Dardick and GSC Enterprises, Inc. (incorporated by reference to
Exhibit (c)(2) to the Schedule 14D-1)
Exhibit 4 Integration Consulting/Noncompetition Agreement dated November 8, 1999 between Tefron
U.S. Holdings Corp. and Clyde Wm. Engle (incorporated by reference to Exhibit (c)(3) to
the Schedule 14D-1)
Exhibit 5 Integration Consulting/Noncompetition Agreement dated November 8, 1999 between Tefron
U.S. Holdings Corp. and Nathan H Dardick (incorporated by reference to Exhibit (c)(4)
to the Schedule 14D-1)
Exhibit 6 Offer to Purchase dated November 12, 1999 (incorporated by reference to Exhibit (a)(1)
to the Schedule 14D-1
Exhibit 7 Letter to Stockholders of Alba Waldensian, Inc. dated November 12, 1999*
Exhibit 8 Opinion of William Blair & Company, L.L.C. dated November 8, 1999 (included as Annex II
hereto)*
Exhibit 9 Confidentiality Agreement dated August 25, 1999 between Tefron, Ltd. and the Company
(incorporated by reference to Exhibit (c)(7) to the Schedule 14D-1)
Exhibit 10 Joint Press Release dated November 8, 1999 (incorporated by reference to
Exhibit (a)(8) to the Schedule 14D-1)
ANNEX I INFORMATION STATEMENT
ANNEX II OPINION OF WILLIAM BLAIR & COMPANY, L.L.C.
</TABLE>

- ------------------

* Included in the materials mailed to the Company's stockholders.

* * * * *

<PAGE>
SIGNATURE

AFTER REASONABLE INQUIRY AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, I
CERTIFY THAT THE INFORMATION SET FORTH IN THIS STATEMENT IS TRUE, COMPLETE AND
CORRECT.

By: /s/ GLENN J. KENNEDY
-----------------------------
Glenn J. Kennedy
Chief Financial Officer, Vice
President,
Treasurer and Secretary

Dated: November 12, 1999

<PAGE>

ALBA-WALDENSIAN, INC.
Post Office Box 100
201 St. Germain Avenue, SW
Valdese, North Carolina 28690

November 12, 1999

To our Stockholders:

On behalf of your Board of Directors, I am pleased to inform you that
on November 8, 1999, Alba-Waldensian, Inc. ("Alba-Waldensian") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with AWS Acquisition
Corp., a Delaware corporation ("Purchaser"), and Tefron U.S. Holdings Corp., a
Delaware corporation ("Parent"). Purchaser is a wholly-owned subsidiary of
Parent, and Parent is a wholly-owned subsidiary of Tefron, Ltd., a New York
Stock Exchange listed company. The Merger Agreement provides for the acquisition
of Alba-Waldensian by Parent.

Pursuant to the Merger Agreement, Purchaser has commenced a tender
offer (the "Offer") to purchase all of the outstanding shares of
Alba-Waldensian's Common Stock at a purchase price of $18.50 per share, net to
the seller in cash, without interest. The Offer is currently scheduled to expire
at 12:00 midnight, New York City time, on Monday, December 13, 1999, unless the
Offer is extended.

Following the successful completion of the Offer, upon the terms and
subject to the conditions contained in the Merger Agreement, Purchaser will
merge with and into Alba-Waldensian (the "Merger"), and all shares of
Alba-Waldensian's Common Stock not purchased in the Offer will be converted into
the right to receive, without interest, an amount in cash equal to the amount
paid pursuant to the Offer.

YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT,
THE OFFER AND THE MERGER, DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, ALBA-WALDENSIAN'S STOCKHOLDERS AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
COMMON STOCK PURSUANT TO THE OFFER.

In arriving at its decision, the Board gave careful consideration to a
number of factors described in the attached Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") that is being filed today
with the Securities and Exchange Commission. Among other things, the Board
considered the opinion dated November 8, 1999 of William Blair & Company,
Alba-Waldensian's financial advisor, that, as of such date, and subject to the
conditions and limitations set forth therein, the consideration to be received
by the holders of Alba-Waldensian's Common Stock pursuant to the Merger
Agreement is fair to such holders from a financial point of view.

Accompanying this letter, in addition to the Schedule 14D-9, is the
Purchaser's Offer to Purchase, dated November 12, 1999, together with related
materials including a Letter of Transmittal to be used for tendering your
Alba-Waldensian Common Stock. These documents set forth the terms and conditions
of the Offer and the Merger and provide instructions as to how you can tender
your Alba-Waldensian Common Stock.

WE URGE YOU TO READ EACH OF THE ENCLOSED MATERIALS CAREFULLY.

The Board of Directors and management thank you for the support you
have given Alba-Waldensian.

Very truly yours,

CLYDE WM. ENGLE

Chairman

<PAGE>
ANNEX I

ALBA-WALDENSIAN, INC.
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER

INTRODUCTION

This Information Statement is being mailed on or about November 12, 1999 to
holders of shares of Common Stock, par value $2.50 per share (the "Common
Stock"), of Alba-Waldensian, Inc., a Delaware corporation (the "Company"), in
connection with the anticipated designation of persons (the "Designated
Directors") to the Board of Directors of the Company (the "Board"). Such
designation is to be made pursuant to the Agreement and Plan of Merger (the
"Merger Agreement"), dated as of November 8, 1999 by and among the Company, AWS
Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly-owned
subsidiary of Tefron U.S. Holdings Corp., a Delaware corporation ("Parent") and
a wholly-owned subsidiary of Tefron, Ltd., a corporation organized under the
laws of the State of Israel ("Tefron").

NO ACTION IS REQUIRED BY THE STOCKHOLDERS OF THE COMPANY IN CONNECTION WITH
THE APPOINTMENT OF THE DESIGNATED DIRECTORS. However, Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
Rule 14f-1 promulgated thereunder require the mailing to the Company's
stockholders of the information set forth in this Information Statement prior to
a change in a majority of the Company's directors other than at a meeting of the
Company's stockholders.

You are urged to read this Information Statement carefully. You are not,
however, being asked to take any action.

On November 12, 1999, Purchaser commenced a tender offer (the "Offer") to
purchase all outstanding shares (the "Shares") of the Common Stock at a purchase
price of $18.50 per Share net to the seller in cash, without interest (the
"Offer Price"). The Merger Agreement provides, among other things, that as soon
as practicable after the completion of the Offer, and upon the terms and
conditions contained in the Merger Agreement and in accordance with the relevant
provisions of the Delaware General Corporation Law, Purchaser will merge with
and into the Company (the "Merger"), and the Company will be the surviving
corporation and a wholly owned subsidiary of Parent. At the effective time of
the Merger, each Share then outstanding (other than Dissenting Shares (as
defined in Section 3.1(d) of the Merger Agreement)) and Shares owned by the
Company, Purchaser or Parent will be converted into the right to receive in
cash, without interest, the price per Share paid in the Offer.

The Merger Agreement provides that promptly upon the acceptance for payment
of Shares by Purchaser pursuant to the Offer, Purchaser shall be entitled to
designate and cause to be appointed to the Board of Directors of the Company
(and any committees thereof) a number of designees as will constitute a majority
of the Board of Directors (and any committees thereof); provided, however, that
until the effective time of the Merger the Board of Directors must have at least
two directors who are directors on the date of the Merger Agreement and who are
not officers of the Company (the "Independent Directors").

In connection with the foregoing, the Merger Agreement provides that the
Company will promptly, at the option of Parent, either increase the size of the
Company's Board of Directors (and each committee thereof) and/or obtain the
resignation of such number of its current directors as is necessary to enable
Purchaser's designees to be elected or appointed to, and to constitute a
majority of the Company's Board of Directors (and each committee thereof) as
provided above.

Pursuant to the Merger Agreement, following the election or appointment of
Purchaser's designees and prior to the effective time of the Merger, the
affirmative vote of a majority of the Independent Directors then in office shall
be required by the Company to (i) amend or terminate the Merger Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
the Merger Agreement or (iii) extend the time for performance of Parent's and
Purchaser's respective obligations under the Merger Agreement.

<PAGE>

The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and certain other
information concerning the Offer and the Merger are contained in the Offer to
Purchase which is being mailed with this Information Statement, and in the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company (the
"Schedule 14D-9") with respect to the Offer, of which this Annex I is a part.
Certain other documents (including the Merger Agreement) are filed with the
Securities and Exchange Commission (the "Commission") as exhibits to the
Schedule 14D-9 and as exhibits to the Tender Offer Statement on Schedule 14D-1
and Schedule 13D of Purchaser and Parent (the "Schedule 14D-1"). The exhibits to
the Schedule 14D-9 and the Schedule 14D-1 may be examined at, and copies thereof
may be obtained from the Commission (except that the exhibits thereto cannot be
obtained from the regional offices of the Commission). In addition, the
aforementioned reports and other information may be obtained by searching in the
"EDGAR ARCHIVES" at the Commission's worldwide website (http://www.sec.gov).
Finally, such materials may be inspected and copied at the offices of the
American Stock Exchange, 86 Trinity Place, New York, NY 10006, as the Shares are
listed on the American Stock Exchange.

The information contained in this Information Statement concerning Parent,
Purchaser and the Designated Directors has been furnished to the Company by
Parent. The Company assumes no responsibility for the accuracy or completeness
of such information.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

At the close of business on November 8, 1999, there were (i) 3,246,045
Shares outstanding and (ii) an aggregate of 187,753 Shares issuable upon the
exercise of outstanding options. No securities other than the Common Stock are
entitled to vote for the election of directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding beneficial
ownership of Common Stock as of November 8, 1999 by holders of more than 5% of
the Company's outstanding shares of Common Stock. Other than as set forth below,
there are no persons known by the Company to own beneficially more than 5% of
the outstanding Common Stock.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- --------------------------------------------------------------------- -------------------- --------
<S> <C> <C>
Clyde Wm. Engle ..................................................... 1,122,900(1) 34.54%
GSC Enterprises, Inc.
4433 West Touhy Avenue
Lincolnwood, Illinois 60646
Nathan H Dardick .................................................... 692,066(2) 21.29%
303 East Wacker Drive
Suite 1000
Chicago, Illinois 60601
Dimensional Fund Advisors, Inc. ..................................... 171,400(3) 5.28%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>

- ------------------
(1) According to information contained in an amendment to Schedule 13D dated
August 6, 1998, and other information provided to the Company by Mr. Engle,
127,700 Shares are owned by GSC Enterprises, Inc. and 977,000 Shares are
owned directly by Mr. Engle. Substantially, all of the Shares owned directly
by Mr. Engle and indirectly owned by Mr. Engle through GSC Enterprises, Inc.
are pledged as security for bank loans. Mr. Engle, a Director and Chairman
of the Board of the Company, is the Chairman and Chief Executive Officer of
GSC Enterprises, Inc. Mr. Engle and such corporation have sole voting and
dispositive power with respect to these 1,104,700 Shares.

(Footnotes continued on next page)

I-2
<PAGE>

(Footnotes continued from previous page)

Additionally, members of Mr. Engle's family own 13,200 Shares and Mr. Engle
disavows beneficial ownership of these Shares. Also includes 5,000 Shares
subject to options held by Mr. Engle that are presently exercisable or
exercisable within 60 days.

(2) Based on information contained in an amendment to Schedule 13D dated
February 10, 1999 and information provided to the Company by Mr. Dardick.
Also includes 5,000 Shares subject to options held by Mr. Dardick that are
presently exercisable or exercisable within 60 days.

(3) According to information contained in an amendment to Schedule 13G dated
February 11, 1999 and information provided to the Company by Dimensional
Fund Advisors, Inc. ("DFA"), a registered investment advisor, DFA is deemed
to have beneficial ownership of 171,400 Shares, all of which Shares are held
in portfolios of DFA Investment Dimensions Group Inc., the "Fund"), a
registered open-end investment company, or in series of the DFA Investment
Trust Company (the "Trust"), a Delaware business trust or the DFA Group
Trust and DFA Participation Group Trust, investment vehicles for qualified
employee benefit plans, all of which DFA serves as investment manager. DFA
disclaims beneficial ownership of all 171,400 Shares.

On May 15, 1998, investors, including the Company and Mr. Clyde Wm. Engle,
the Company's Chairman and beneficial holder through affiliates of a majority of
the Company's Common Stock, purchased from a major bank 1,877,400(1) Shares
formerly held by Sunstates Corporation, pursuant to a private sale of collateral
conducted by the bank following default on the loan for which such Shares served
as collateral. The Shares held by Sunstates Corporation constituted a majority
of the Shares. In connection with such sale Mr. Engle purchased 1,087,400(1)
Shares, Mr. Nathan H Dardick purchased 200,000(1) Shares and the Company
purchased 590,000(1) Shares. The Company intends to hold the 590,0001 Shares as
treasury stock and currently has no plans for future utilization of those
Shares. As a result of these transactions, Sunstates Corporation no longer owns
any Shares.
- ------------------
(1) As adjusted for the 3-for-2 stock split effected on November 16, 1998 and
the 4-for-3 stock split effected on June 4, 1999.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth, as of November 8, 1999, certain information
with respect to the beneficial ownership of the Common Stock by all current
directors, Designated Directors and executive officers of the Company as a group
and certain Named Executive Officers. The Named Executive Officers listed below
are the Company's three most highly compensated current executive officers
excluding the Chief Financial Officer and the former Chief Executive Officer,
whose total annual salary and bonus for the fiscal year ended December 31, 1998,
exceeded $100,000. Information with respect to the beneficial ownership of the
Common Stock by the former Chief Executive Officer immediately follows the
table. Information with respect to the beneficial ownership of the Common Stock
by the Chief Financial Officer, each of the current directors and the Designated
Directors is contained in the table under "Information About Directors and
Nominees for Director."

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------------------------------------------------------------- ----------------------- --------
<S> <C> <C>
Donald R. Denne..................................................... 21,750(2) *
Dixon R. Johnston................................................... 20,625(3) *
Ronald J. Harrison.................................................. 14,699(4) *
All Directors, Designated Directors and
Executive Officers as a group (20 persons)........................ 1,958,307(5) 59.0%
</TABLE>

(Footnotes continued on next page)

I-3
<PAGE>

- ------------------
* Less than 1%.

(Footnotes continued from previous page)

(1) Except as indicated in the table under the heading "Voting Securities,
Principal Stockholders and Holdings of Management" above, each Director,
Designated Directors and executive officer possesses the sole power to vote
and dispose of the Shares beneficially owned by him.

(2) Includes 18,750 Shares subject to options that are presently exercisable or
exercisable within 60 days.

(3) Includes 8,125 Shares subject to options that are presently exercisable or
exercisable within 60 days.

(4) Includes 2,500 Shares subject to options that are presently exercisable or
exercisable within 60 days.

(5) Includes 71,126 Shares subject to options that are presently exercisable or
exercisable within 60 days.

According to information contained in a Form 4 filed for September, 1999,
Lee N. Mortenson, the Chief Executive Officer of the Company from February 1997
through his retirement on July 27, 1999, beneficially owns 92,900 Shares
(including 1,000 Shares subject to options that are presently exercisable or
exercisable within 60 days) representing 2.9% of the Common Stock. According to
the Form 4, Mr. Mortenson holds 6,000 of such Shares indirectly.

I-4

<PAGE>
INFORMATION ABOUT DIRECTORS AND DESIGNEES FOR DIRECTOR

The Company's Bylaws provide that the number of directors of the Company
shall be not less than five nor more than 15, the exact number to be determined
from time to time by resolution of the Board of Directors. By resolution adopted
June 15, 1998, the Board set the number of directors at nine. Due to the
resignation of Mr. Mortenson in July 1999, there are currently eight directors.
The Bylaws also provide for three classes of directors having staggered terms of
office, with each director serving a three-year term expiring upon the election
and qualification of his successor. Pursuant to the Merger Agreement it is
expected that the Designated Directors will assume office promptly following the
purchase of Shares by Purchaser at which time the Designated Directors will
constitute a majority of the Board. This step will be accomplished at a meeting
or by written consent of the Board providing that the size of the Board will be
increased and/or sufficient numbers of current directors will resign such that,
immediately following such action, the number of vacancies to be filled by the
Designated Directors will be available.

DESIGNATED DIRECTORS

Parent has informed the Company that it will choose the Designated
Directors from the persons listed below, each of whom is an executive officer of
Parent. The names and certain biographical information concerning the Designated
Directors are set forth below. The current business address of each Designated
Director is c/o Tefron Ltd. 28 Chida Street, Bnei-Brak 51371 Israel.

The Parent and Purchaser have informed the Company that each of the
Designated Directors listed below has consented to act as a director of the
Company.

Sigi Rabinowicz, 50, CEO of Tefron. Mr. Rabinowicz joined Tefron in 1977
and has served as CEO since 1990. Mr. Rabinowicz has also served as a Director
of Macpell since April 21, 1998. Mr. Rabinowicz has over 25 years of experience
in the textile industry in Israel and abroad. Prior to joining the Company,
Mr. Rabinowicz was general Manager of Kortes Hosiery Mills in Australia, which
was subsequently acquired by Sara Lee Corporation.

Arie Wolfson, 37, Chairman and President of Tefron. Joined Tefron in 1987
and has served as Chairman of the Board of Directors since 1997 and President
since 1993, prior to which time Mr. Wolfson served as Chief Financial Officer
from 1988 to 1990 and Assistant to the CEO from 1990 to 1993. Mr. Wolfson has
also served as CEO of Macpell since May 17, 1998, as well as Chairman of the
Board of Macpell since April 21, 1998.

Yoseph Ron, 52, General Manager. Mr. Ron joined Tefron as General Manager
in 1999, prior to which time Mr. Ron held the positions first as Managing
Director of Operations of Delta, Inc. and then as Division Manager of Delta,
Inc. from 1982 to 1999. Mr. Ron has also served as Managing Director of Begd'or.

Eliezer Peleg, 61, Director. Mr. Peleg has been a Director of Tefron since
1993. Mr. Peleg served as the Chairman of the board of directors of Macpell from
October 1993 to April 20, 1998, and has served as Director of Macpell since
1986. From November 1993 to July 1994, Mr. Peleg was the Chief Executive Officer
of Macpell.

Nachum Peleg, 55, Director. Mr. Peleg has been a Director of Tefron since
1993. Mr. Peleg served as the CEO of Macpell from 1996 to May 16, 1998.
Mr. Peleg served as the Chairman of the board of directors and Managing Director
of Macpell from 1986 to 1993 and as Directors of Macpell from 1993 to 1996.

Lenny Recanti, 45, Director. Mr. Recanti has been a Director of Tefron
since 1988. Mr. Recanti currently serves as a Senior Manger and a Director of
DIC, the Chairman of the board of directors of Ilanot Discount Ltd., the
Chairman of the board of directors of Delek- The Israel Fuel Company and a
member of the board of directors of IDB Holdings Ltd. and of other companies in
the IDB Group.

Frank J. Klein, 56, Director. Mr. Klein joined Tefron as a Director on
June 21, 1998. Mr. Klein was appointed President of PEC on January 1, 1995.
Prior to such appointment, he served as Executive

I-5
<PAGE>
Vice President of Israel Discount Bank of New York beginning in 1985. Mr. Klein
served as Executive Vice President of PEC from November 1977 to November 1991
and as Treasurer of PEC from May 1980 to November 1991. Mr. Klein is a Director
of PEC, as well as of a number of companies associated with it, including
Tambour Ltd. where he serves as Chairman of the Board, Scitex, Elron Electronics
Industries Ltd., Level 8 Systems, Inc. Property and Building Corporation Ltd.
and Super-Sol.

The Company has been advised by Parent that, to the best of Parent's
knowledge, none of the Parent Designees has been involved in any transactions
with the Company or any of its directors, executive officers or affiliates which
are required to be disclosed herein pursuant to the rules and regulations of the
Commission, except as may be disclosed herein or in the Schedule 14D-1.

CURRENT DIRECTORS

The following table sets forth certain information about the current
directors of the Company, including information about their beneficial ownership
of Common Stock as of November 8, 1999. A description of each person's business
activities during the past five years, including his position, if any, with the
Company and other pertinent information follow the table.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
YEAR FIRST ----------------------------
DIRECTORS WITH BECAME NO. OF
TERMS EXPIRING 2002 AGE DIRECTOR SHARES(1) % OF CLASS
- -------------------------------------------------------------- --- ---------- --------- ----------
<S> <C> <C> <C> <C>
Michael R. Stroll............................................. 58 1999 4,000(2) *
C. Alan Forbes................................................ 65 1974 5,100(4) *

BENEFICIAL OWNERSHIP
OF COMMON STOCK
YEAR FIRST ----------------------------
DIRECTORS WITH BECAME NO. OF
TERMS EXPIRING 2001 AGE DIRECTOR SHARES(1) % OF CLASS
- -------------------------------------------------------------- --- ---------- --------- ----------
<S> <C> <C> <C> <C>
Clyde Wm. Engle............................................... 56 1980 1,122,900(2)(4) 34.54%
Joseph C. Minio............................................... 56 1983 5,000(4) *
Nathan H Dardick.............................................. 49 1998 692,067(4) 21.29%
<CAPTION>

BENEFICIAL OWNERSHIP
OF COMMON STOCK
YEAR FIRST ----------------------------
DIRECTORS WITH BECAME NO. OF
TERMS EXPIRING 2000 AGE DIRECTOR SHARES(1) % OF CLASS
- -------------------------------------------------------------- --- ---------- --------- ----------
<S> <C> <C> <C> <C>
Paul H. Albritton, Jr......................................... 55 1991 6,200(4) *
William M. Cousins, Jr........................................ 74 1991 5,000(4) *
Glenn J. Kennedy.............................................. 47 1991 32,500(4) 1.00%
</TABLE>

- ------------------

* Less than 1% of the outstanding shares of Common Stock of the Company.

(1) Except as otherwise noted, each Director possesses the sole power to vote
and dispose of the Shares beneficially owned by him.

(2) Includes 4,000 Shares subject to options that are presently exercisable or
exercisable within 60 days.

(3) See Note 1 in the table under the heading "Security Ownership of Certain
Beneficial Owners" above regarding the holdings of Clyde Wm. Engle.

(4) Includes 5,000 Shares subject to options that are presently exercisable or
exercisable within 60 days.

Paul H. Albritton, Jr. Mr. Albritton is Vice President and Chief Financial
Officer (since May 1994) of C-Phone Corporation, a publicly traded company
engaged in video communication equipment

I-6
<PAGE>
manufacturing. From September 1992 to May 1994, Mr. Albritton, an attorney and
certified public accountant, was a self-employed financial consultant and
private investor.

William M. Cousins, Jr. Mr. Cousins has been President of William M.
Cousins Jr., Inc., a management-consulting firm, since 1974. Mr. Cousins
received his MBA from Harvard University. Mr. Cousins is also a Director of
Wellco Enterprises, Inc. and BioSepra, Inc.

Nathan H Dardick. Mr. Dardick is an attorney, independent business
consultant and private investor. From June 1974 until May 1996, Mr. Dardick was
engaged primarily in the practice of law in Chicago, Illinois. He was a partner
in Dardick & Denlow (and its predecessor firms) from June 1977 through August
1993, and a partner in Sachnoff & Weaver from September 1993 through May 1996,
when Mr. Dardick retired from the active practice of law in order to focus
primarily upon making investments in public and private companies. Mr. Dardick
is also President of Captiva Investment Company, which was founded by him in
April 1996 as a vehicle to make loans to small private businesses. Mr. Dardick
received his A.B. degree from Washington University in St. Louis and his law
degree from The University of Chicago Law School.

Clyde Wm. Engle. Mr. Engle has served as Chairman of the Board of the
Company since May 1991. He also holds positions with various businesses
headquartered in Chicago, Illinois, including RDIS Corporation (formerly Libco
Corporation) (Chairman of the Board and President), which is the sole
shareholder of Telco Capital Corporation; Telco Capital Corporation (Chairman of
the Board and Chief Executive Officer), which is the majority shareholder of
Hickory Furniture Company; Hickory Furniture Company (Chairman of the Board),
which is the majority shareholder of Sunstates Corporation; GSC Enterprises,
Inc. (Chairman of the Board, President and Chief Executive Officer), a one bank
holding company, and Bank of Lincolnwood (Chairman of the Board and President).
Mr. Engle is also Chairman of the Board and Chief Executive Officer of Sunstates
Corporation (formerly Acton Corporation), a Delaware corporation, which is a
publicly traded company primarily engaged in real estate and manufacturing. The
following information is provided voluntarily by Mr. Engle although it is not
deemed material information as that term is used in Item 401 of Regulation S-K.
Mr. Engle is the subject of a Cease and Desist Order dated October 7, 1993,
issued by the Securities and Exchange Commission requiring Mr. Engle and certain
of his affiliated companies to permanently cease and desist from committing any
further violations of Section 16(a) of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder, which requires monthly and other
periodic reports of transactions in certain securities. According to information
provided to the Company by Mr. Engle, the information required to be reported
pursuant to Section 16(a) was otherwise reported in a timely manner in other
publicly available reports.

C. Alan Forbes. Mr. Forbes is a management consultant in Charlotte, North
Carolina and is President of C.A. Forbes & Assoc., Inc., a general management
consulting firm specializing in profit improvement programs and corporate
turnarounds. While the firm has worked in many industries, primary
concentrations has been in the manufacture of textiles, furniture, precision
machine tools and metal fabricated products, as well as wholesale distribution
of HVAC and lumber wood products. Mr. Forbes has worked internationally in over
forty countries.

Glenn J. Kennedy. Mr. Kennedy has served as Vice President, Treasurer,
Secretary and Chief Financial Officer of the Company since June 1997.
Mr. Kennedy has been a director of Alba-Waldensian since 1991 and was elected
Vice President, Treasurer, Secretary and Chief Financial Officer in June 1997.
He also currently serves as Vice President (since July 1988), Treasurer and
Chief Financial Officer (since May 1988) of Sunstates Corporation (formerly
Acton Corporation), a publicly traded company primarily engaged in real estate
and manufacturing. Mr. Kennedy was formerly Chief Financial Officer and
Treasurer of Sunstates Corporation, a publicly traded company which was
primarily engaged in specialized automobile insurance underwriting and real
estate development, which was merged into Acton Corporation in May of 1988.
Mr. Kennedy has served as Chief Financial Officer of Simms Investment Company
and was a Senior Audit Manager with Price Waterhouse & Co. Mr. Kennedy is a
Certified Public Accountant and has a Bachelors Degree in Accounting from North
Carolina State University.

I-7
<PAGE>
Joseph C. Minio. Mr. Minio has been President, Chief Executive Officer and
Director of Belle Haven Management Ltd. since 1986. Belle Haven Management Ltd.
is engaged in the business of acquiring controlling positions in small and
medium-sized under-performing companies, and provides top level general
management services, including strategic planning, restructuring, financing and
acquisition search, analysis and negotiation. He has also served as President
and Chief Executive Officer of Intelligent Business Communications Corporation.
Intelligent Business Communications Corporation was engaged in the design,
development, manufacture, and marketing of advanced state of the art satellite
data control equipment as well as vertical circuit switches and T-1 multiplexers
for both data and voice communications.

Michael R. Stroll. Mr. Stroll was President and Chief Operating Officer of
Capcom Coin-Op from 1994 to 1996. From 1987 to 1988, Mr. Stroll was President of
Sega, USA, an electronics game manufacturer. Mr. Stroll also served as President
and Chief Operating Officer of Williams Electronics, Inc., a public company
engaged in electronic game design and manufacture. Mr. Stroll has an engineering
degree from the University of Hartford.

THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Audit Committee is currently comprised of Messrs. Albritton, Cousins,
Dardick and Stroll (Mr. Stroll joined the Committee in May 1999). Mr. Albritton
serves as Chairman. The principal duties of the Audit Committee are to review
with the independent auditors (i) the purpose and scope of services to be
performed by them, (ii) the financial statements and related opinions of the
auditors, (iii) the observations and recommendations of the auditors relating to
accounting principles or practices, internal controls, financial reporting and
operations and (iv) other pertinent matters necessary to assist the Board of
Directors in fulfilling its responsibilities for public financial reporting. In
addition, the Audit Committee communicates with members of the Company's
management staff with respect to auditing matters, supervises and reviews the
Company's internal audit procedures and activities and recommends to the Board
of Directors nomination of an independent auditing firm for the Company. The
Audit Committee met three times during 1998.

The Stock Option and Executive Compensation Committee is currently
comprised of Messrs. Dardick, Engle, Forbes, Minio and Stroll (Mr. Stroll joined
the Committee in May 1999). Mr. Forbes serves as Chairman. The principal duties
of the Stock Option and Executive Compensation Committee are to review and
recommend changes with respect to the Company's stock option plans, to recommend
options to be granted under the plans, to review salaries and other compensation
paid to management of the Company and to assist the Chief Executive Officer with
respect to the Company's executive compensation policies. The Stock Option and
Executive Compensation Committee met six times during 1998.

The Company does not have a nominating committee. The entire Board of
Directors considers and nominates individuals for election to serve on the Board
of Directors.

The Board of Directors met ten times during 1998. All Directors attended at
least 75% of the meetings of the Board and all committees of which they were a
member.

COMPENSATION OF DIRECTORS

Directors receive an annual retainer of $1,300 ($2,000 for each committee
member) and $1,500 for each regular meeting of the Board attended ($1,500 for
each telephonic Board meeting). Directors who serve on the Audit Committee, the
Executive Committee or the Stock Option and Executive Compensation Committee
receive an additional $500 for each Committee meeting attended ($500 for each
telephonic Committee meeting).

I-8

<PAGE>
SHAREHOLDER RETURN PERFORMANCE

Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock (AWS)
against the cumulative total return of the S&P 500 Composite Index and the
Russell 3000 Textile Apparel Index for the period covering the Company's five
fiscal year periods ended December 31, 1998. In prior years, the Company had
compared its performance against a Peer Group consisting of publicly held
entities selected by the Company. In 1998, the Company decided to utilize a
published industry index (the Russell 3000 Textile Apparel Index) in lieu of the
Peer Group. The 1998 performance graph presents both the newly adopted industry
index and the old Peer Group; which consisted of: Hartmarx Corp., Hampshire
Group Ltd., Danskin Inc., Nantucket Industries, Inc., Warnaco Group Inc.
Class A Common Stock, Fruit of the Loom Inc. Class A Common Stock, Sara Lee
Corp. and Premiumwear Inc.

COMPARATIVE FIVE-YEAR TOTAL RETURNS*
ALBA-WALDENSIAN, S&P 500,
RUSSELL 3000 TEXTILE APPAREL INDEX
(Performance Results through 12/31/98)

[LINE CHART APPEARS HERE]

<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AWS $100.00 $107.23 $73.49 $56.63 $44.58 $369.09
S&P 500 $100.00 $101.33 $139.33 $171.72 $229.03 $294.89
New Peer Group $100.00 $94.93 $108.97 $135.87 $148.23 $123.09
Old Peer Group $100.00 $104.52 $130.15 $159.44 $221.76 $216.16
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in AWS common stock, S&P 500,
Russell 3000 Textile Apparel Index and Old Peer Group.

Factual material is obtained from sources believed to be reliable, but the
publisher is not responsible for any errors or omissions contained herein.

* Cumulative total return assumes reinvestment of dividends.

Source: Russell/Mellon Analytical Services

I-9

<PAGE>
EXECUTIVE OFFICERS

The following table sets forth certain information about the Company's executive
officers:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ------------------------------------------------ --- ------------------------------------------------
<S> <C> <C>
Donald R. Denne, Sr............................. 62 Senior Vice President and President of the
Health Products Division
Dixon R. Johnston............................... 57 Senior Vice President and President of the
Consumer Products Division
Glenn J. Kennedy................................ 47 Vice President, Treasurer,
Secretary and Chief Financial Officer
Ronald J. Harrison.............................. 52 Vice President--Operations
Warren R. Nesbit, II............................ 46 Vice President--Human Resources
James Douglas Dickson........................... 42 Assistant Secretary
</TABLE>

The following paragraphs set forth information concerning each executive
officer's business experience:

Donald R. Denne, Sr. Mr. Denne joined the Company in 1987 and is Senior
Corporate Vice President and President of the Health Products Division. Prior to
joining the Company, Mr. Denne served as Vice President of Marketing for General
Medical Corporation, Vice President of Health Products for Work Wear Corporation
and Vice President for Business Planning for American Hospital Supply.
Mr. Denne has a B.A. degree from Duke University.

Dixon R. Johnston. Mr. Johnston joined the Company on February 22, 1996
and is Senior Corporate Vice President and President of the Consumer Products
Division. Prior to joining the Company, Mr. Johnston served as Executive Vice
President of Gem-Dandy, Inc. from 1995--1996. Mr. Johnston served as Director of
Motorsports & New Ventures for Sky Box International from 1993 to 1995. He
served as Executive Vice President of Trone Advertising from 1989--1993.
Mr. Johnston was president and part owner of Milpak Graphics from 1986 to 1989.
From 1982 to 1986 he was President of No-nonsense Fashions, Inc., a division of
Kayser-Roth Hosiery. Mr. Johnston has a degree in economics from Northwestern
University and an MBA from the University of California, Berkeley.

Glenn J. Kennedy.--see information under "INFORMATION ON DIRECTORS AND
DESIGNEES FOR DIRECTOR".

Ronald J. Harrison. Mr. Harrison joined the Company in February 1997 as
Vice President of Operations. Prior to joining the Company, Mr. Harrison had 29
years of experience in the apparel business holding various positions including
industrial engineer, plant manager and vice president of manufacturing (Champion
Inc.) and president of two smaller apparel companies (C & L Apparel
Manufacturing and Hartin Industries). Prior to joining the Company,
Mr. Harrison was chief operating officer for Jelyn Associates (d/b/a Old Glory),
a Pennsylvania sweater company from 1995 to February 1997. Offshore experience
includes Mexico, all of Central America and the Caribbean Basin. Mr. Harrison
has a bachelor's degree from Louisiana Tech University and an MBA from Memphis
State University.

Warren Nesbit, II. Mr. Nesbit joined the Company in December 1985 as
Director of Human Resources. He was named Vice President of Human Resources in
1990 and elected to serve as a Corporate Vice President in 1993. Mr. Nesbit
served as Vice President of Industrial Relations with Marion Manufacturing, in
Marion, North Carolina prior to joining the Company. He held various
manufacturing and human resource responsibilities with Burlington Industries
from 1978 to 1984. Mr. Nesbit is a graduate of the University of North Carolina.

James Douglas Dickson. Mr. Dickson joined the Company in 1994 as Corporate
Controller. He was elected Assistant Secretary on December 15, 1994. Prior to
joining the Company, Mr. Dickson served as Controller of Hickorycraft, Inc., a
division of Masco Corporation, from 1987 to 1994 and as Division Controller of
Sealed Air Corporation from 1982 to 1987. Mr. Dickson holds a B.B.A. from the
University of Georgia and is a Certified Management Accountant.

I-10
<PAGE>
The Company's officers are elected for a one-year term at the annual
meeting of the Board of Directors.

Lee N. Mortenson, the Chief Executive Officer of the Company during fiscal
1998, retired on July 27, 1999. The Board of Directors has not elected a
successor to Mr. Mortenson and the Company does not currently have a Chief
Executive Officer.

EXECUTIVE OFFICER COMPENSATION

The table below shows the compensation paid or accrued by the Company for
the three fiscal years ended December 31, 1998, 1997 and 1996, to or for the
account of each of the Chief Executive Officer and the Company's four most
highly compensated other executive officers whose total annual salary and bonus
for 1998 exceeded $100,000 (collectively, the Named Executive Officers).

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ -------------------
STOCK
OTHER ANNUAL OPTION LTIP
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARDS PAYOUTS ALL OTHER
POSITION YEAR ($) ($) ($) (#SH) ($) COMPENSATION(3)
- ------------------------ ------ ------- ------- ------------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lee N. Mortenson(1)..... 1998 225,000(9) 427,928 87,710(10) 1,000(8) 0 2,871
President and Chief 1997 176,500(9) 125,813 47,541(10) 104,000(8) 0 2,684
Executive Officer
Donald R. Denne......... 1998 157,500 30,346 (2) 0 0 2,693
Senior Vice President 1997 150,000 10,800 (2) 10,000 5,100(4) 2,691
of Company and 1996 143,004 18,218 (2) 5,000 4,200(4) 2,519
President of Health
Products Division
Ronald J. Harrison(7)... 1998 145,008 212,643(13) (2) 10,000 0 2,730
Vice President of 1997 112,500 37,676 (2) 25,000 0 1,080
Operations
Dixon R. Johnston(5).... 1998 157,500 233,278(13) (2) 20,000 0 2,769
Senior Vice President 1997 150,000 41,797 20,000(6) 12,500 0 2,800
of Company and 1996 121,654 25,000 25,000(6) 12,500 0 1,136
President of the
Consumer Products
Division
Glenn J. Kennedy(12).... 1998 146,500(14) 72,375 (2) 1,000(8) 0 540
Vice President, 1997 69,244(14) 30,000 (2) 29,000(8) 0 --
Treasurer, Secretary
and Chief Financial
Officer
</TABLE>

- ------------------
All share amounts in the above table have been restated to reflect the 3 for 2
stock split effected on November 16, 1998 and the 4 for 3 stock split effected
on June 4, 1999.

(1) The Board of Directors elected Mr. Lee N. Mortenson, a Director of the
Company, on February 20, 1997 as President and Chief Executive Officer of
the Company. Mr. Mortenson retired July 27, 1999.

(2) Less than 10% of annual salary and bonus.

(Footnotes continued on next page)

I-11
<PAGE>
(Footnotes continued from previous page)

(3) Represents matching contributions by the Company under its Employee Savings
and Profit Sharing Plan.

(4) These payments were made pursuant to the Company's 1991 Management Bonus
Plan in connection with the expiration of stock options. See footnote 1 to
the Option Grants Table below.

(5) Mr. Dixon R. Johnston joined the Company in February 1996 and is Senior
Vice President of the Company and President of the Consumer Products
Division.

(6) Includes a $20,000 moving allowance ($15,000 in 1996) paid to or on behalf
of Mr. Johnston and a $10,000 signing bonus paid in 1996.

(7) Mr. Ronald J. Harrison joined the Company in February 1997 as Vice
President of Operations.

(8) Includes 1,000 and 4,000 options (restated) issued in 1998 and 1997,
respectively, in connection with the Company's 1997 Nonqualified Stock
Option Plan for Directors.

(9) Includes $10,500 and $8,750 in 1998 and 1997, respectively, of fees for
serving on the Board of Directors and various Board Committees.

(10) Includes country club dues ($4,619 in 1998 and $3,249 in 1997), automobiles
($11,191 in 1998 and $5,292 in 1997), temporary living expenses ($56,201 in
1998 and $10,845 in 1997), travel for spouse ($6,124in 1997) and
reimbursements for payment of income taxes ($9,016 in 1997).

(11) Represents payment of previously deferred compensation under the Company's
1989 Non-Qualified Deferred Compensation Plan.

(12) Mr. Glenn J. Kennedy, a Director of the Company, was elected in June 1997
as Vice President, Treasurer, Secretary and Chief Financial Officer.

(13) Includes $150,000 compensation awarded on a discretionary basis for results
achieved during the calendar year under a plan approved by the Board of
Directors. The compensation is paid over the succeeding three years on a
prorate basis. Should the officer voluntarily leave the Company during that
three-year period, he will forfeit all rights to any unpaid balance.

(14) Includes $11,500 and $6,626 in 1998 and 1997, respectively, of fees for
serving on the Board of Directors and various Board Committees.

TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS

The Company has entered into severance arrangements with respect to the
Chief Executive Officer and the Named Executive Officers of the Company, Messrs.
Denne, Johnston, Harrison and Kennedy.

Mr. Mortenson, the former Chief Executive Officer of the Company, was
provided with a severance package upon his resignation from the Company on July
27, 1999, providing for the payment of 100% of his base pay ($230,000) plus
benefits, including country club dues and the use of the Ford Explorer provided
for his use by the Company, for a period equal to the lesser of twelve months or
the number of months Mr. Mortenson remains unemployed. At the end of the period
Mr. Mortenson shall have the option to purchase such Ford Explorer for its fair
market value. As part of his severance package all of Mr. Mortenson's options
became immediately vested upon the date of his resignation and the Company
agreed to pay closing costs for the sale of his Chicago condominium and any
moving expenses paid by Mr. Mortenson to return to Chicago the furnishings
brought by Mr. Mortenson from Chicago when he began his employment with the
Company. Mr. Mortenson was also given the home computer provided by the Company
for his use during his employment.

With respect to Mr. Denne, his severance arrangement provides that in the
event that he is terminated without cause he shall be entitled to receive a
payment equal to 100% of his base pay and benefits for a period of six months.
In addition, following the six-month period, Mr. Denne is entitled to receive a
contingent payment equal to 100% of his base pay and benefits for the lesser of
(a) six months or (b) the number of months that he remains unemployed.

I-12
<PAGE>
Mr. Harrison's severance arrangement provides that in the event that he is
terminated without cause he shall be entitled to receive a payment equal to 100%
of his base pay and benefits for a period of six months. In addition, following
the six-month period, Mr. Harrison is entitled to receive a contingent payment
equal to 100% of his base pay and benefits for the lesser of (a) six months or
(b) the number of months that he remains unemployed.

Mr. Johnston's severance arrangement provides that in the event his
employment with the Company is involuntarily terminated or he is asked to
resign, in either case without cause, then he shall be entitled to receive a
payment equal to 100% of his base pay and benefits for a period of twelve
months. In addition, following the twelve-month period, Mr. Johnston is entitled
to receive a contingent payment equal to 100% of his base pay and benefits for
the lesser of (a) twelve months or (b) the number of months that he remains
unemployed.

Mr. Kennedy's severance arrangement provides that in the event that he is
terminated without cause he shall be entitled to receive a payment equal to 100%
of his base pay and benefits for a period of six months. In addition, following
the six-month period, Mr. Kennedy is entitled to receive a contingent payment
equal to 100% of his base pay and benefits for the lesser of (a) six months or
(b) the number of months that he remains unemployed.

I-13

<PAGE>
The table below shows the individual grants of stock options to the Named
Executive Officers during the fiscal year ended December 31, 1998. No stock
appreciation rights (SARs) were granted during the year.

OPTION GRANTS IN 1998 FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT
---------------------------------------------------- ASSUMED RATES OF
% OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM*
GRANTED EMPLOYEES BASE PRICE EXPIRATION ------------------
NAME (SHS) IN FISCAL YEAR ($/SH) DATE 5% 10%
- ---------------------------------------- ------- -------------- ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Lee N. Mortenson(3)..................... 1,000(2) 1.2% $ 20.44 12/17/03 $ 5,646 $ 12,477
Donald R. Denne......................... -- -- -- -- -- --
Ronald J. Harrison...................... 10,000(1) 11.9% $ 20.44 12/17/03 $56,465 $124,773
Dixon R. Johnston....................... 20,000(1) 23.8% $ 6.00 9/23/03 $33,154 $ 73,261
Glenn J. Kennedy........................ 1,000(2) 1.2% $ 20.44 12/17/03 $ 5,646 $ 12,477
</TABLE>

- ------------------
All amounts in the above table have been restated to reflect the 3 for 2 stock
split effected on November 16, 1998 and the 4 for 3 stock split effected
June 4, 1999.

* These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions.

(1) Qualified stock option granted by the Board of Directors under the 1993 Long
Term Performance Plan. The option becomes exercisable as to one-fourth of
the Shares each year beginning one year after the date of grant. The option
price equals the average of the high and low price of the Common Stock on
the American Stock Exchange on the date of grant. Special provisions govern
the exercise of the option in the event of termination of employment,
retirement, disability or death.

(2) Options granted under the Company's 1997 Nonqualifed Stock Option Plan for
Directors. The option becomes exercisable on the date of grant. The option
price equals the average of the high and low price of the Common Stock on
the American Stock Exchange on the date of grant. Special provisions govern
the exercise of the option in the event of termination of directorship,
retirement, disability or death.

(3) All of Mr. Mortenson's options became immediately vested pursuant to a
Letter of Understanding, dated July 27, 1999, concerning his severance
package.

I-14
<PAGE>
The table below shows, on an aggregated basis, each exercise of stock
options during the fiscal year ended December 31, 1998 by each of the Named
Executive Officers and the 1998 fiscal year-end value of unexercised
options. No SARs were granted or exercised during the year and no SARs are
currently outstanding.

AGGREGATE OPTION EXERCISES IN THE 1998 FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES ACQUIRED FY-END (#SH) FY-END ($)
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#SH) ($) UNEXERCISEABLE UNEXERCISEABLE
- ---------------------------------- --------------- -------------- ------------- ------------------
<S> <C> <C> <C> <C>
Lee N. Mortenson.................. 25,000 $252,813 5,000/75,000 $66,125/$1,244,531
Donald R. Denne................... 6,000 $25,125 13,750/11,250 $226,836/$184,570
Ronald J. Harrison................ 6,249 $82,804 0/18,751 $0/$309,972
Dixon R. Johnston................. 0 $0 9,375/35,625 $154,980/$518,926
Glenn J. Kennedy.................. 6,249 $83,194 5,000/18,777 $66,125/$311,133
</TABLE>

- ------------------
All amounts in the above table have been restated to reflect the 3 for 2 stock
split effected on November 16, 1998 and the 4 for 3 stock split effected on
June 4, 1999.

See No. 3 under "General Executive Compensation Policies" in the Stock Option
and Executive Compensation Committee Report regarding expiring stock options
with option prices higher than market prices.

STOCK OPTION AND EXECUTIVE
COMPENSATION COMMITTEE REPORT FOR FISCAL 1998

The Stock Option and Executive Compensation Committee of the Board of
Directors of the Company (the "Committee") provides overall guidance with
respect to the Company's executive compensation programs. The Committee is
composed of four members (all outside directors) and it meets at least once a
year to review the Company's compensation programs, including executive salary
administration, stock and incentive compensation plans. The Committee considers
and makes final decisions regarding the compensation of the Chief Executive
Officer and the other executive officers of the Company.

GENERAL EXECUTIVE COMPENSATION POLICIES

The Company's executive compensation policies are designed to attract and
retain top quality executive officers and to reward executive officers for
performance measured by review of financial performance criteria and achievement
of strategic corporate objectives.

The Company's executive officers are eligible to receive three principal
types of compensation: base salary, annual incentive compensation and stock
options and related bonus plan payments, each of which is more fully described
below. In addition, executive officers participate in the Company's various
other employee benefit plans, including the Company's Employee Savings and
Profit Sharing Plan.

1. Base salary. The Company has historically established the base salary of
its executive officers on the basis of each executive officer's experience,
scope of responsibility and accountability within the Company and salary and
benefits at comparable public companies.

2. Annual incentive compensation. To incentivize the compensation of
executive officers, a component of an executive officer's total compensation
arrangement derives from participation in the

I-15
<PAGE>
Company's 1989 Management Incentive Plan (the "MI Plan"). Under the MI Plan, the
Named Executive Officers can earn a designated percentage (as determined by the
Compensation Committee) of annual salary based upon two or more of three
criteria: actual performance against established personal objectives ("MBOs"),
Company profit performance against the established budget, and/or divisional
profit performance against the established budget. Under the MI Plan, Messrs.
Denne, Harrison, Johnston and Kennedy may be awarded as bonuses up to 51.8%,
47.3%, 51.8% and 44.6%, respectively, of their base salary in 1999.

Varying percentages of each Named Executive Officer's bonus for 1998 was
tied to the achievement of established financial and budget objectives. These
budget objectives are approved annually by the Board of Directors. Falling below
85% of the budget objective results in no bonus award with respect to the budget
objective component of the bonus. The other portion of each Named Executive
Officer's bonus depends on his achievement of MBOs and other strategic goals of
the Company which are determined and approved for each fiscal year by the
Committee. The ability of the Named Executive Officer to receive an award of the
full amount for a particular year depends on whether or not the established
objective, which may be subjectively adjusted by the Committee for unusual
circumstances, is met.

3. Stock option compensation and related bonus payments. The Committee
believes that stock ownership is another way to align the interests of the
executive officers with those of the Company's stockholders. The Committee
generally awards stock options to an executive officer based on his position
with the Company. The Committee believes that stock options give the executive
officer a proprietary interest in the Company and allow executive officers to
realize economic gain upon increases in stockholder value over time. To that
end, the Committee may award executive officers with stock options under the
Company's 1993 Long Term Performance Plan (the "1993 Plan"). During the fiscal
year ended December 31, 1998, the Committee granted stock options to the
Company's Executive Officers with respect to a total of 39,000 Shares (restated
to reflect 4 for 3 stock split effected June 4, 1999) of Common Stock as
follows:

Ronald J. Harrison............................................. 10,000 Shares
Dixon R. Johnston.............................................. 20,000 Shares
Warren R. Nesbit............................................... 9,000 Shares

In addition, a bonus will be paid to holders of options, granted prior to
October 21, 1997, in the event that on the date the option expires, the book
value of the stock has increased during the option's term more rapidly than the
market value of the stock. In such event, the option holder is paid a bonus
equal to the amount by which the growth in the book value per Share exceeds the
growth in the market price of the Company's Common Stock. If the growth in the
stock price exceeds the growth in book value per Share, no bonus will be paid.
The Committee discontinued this bonus program for any options issued after
October 20, 1997.

1998 COMPENSATION FOR MR. MORTENSON

The general policies described above for the compensation of executive
officers also applied to Lee N. Mortenson who was the chief Executive Officer of
the Company during 1998. In determining Mr. Mortenson's base salary, the
Committee took into account comparable salary and benefits at other publicly
traded companies in the textile industry as well as the performance of the
Company in 1997. Mr. Mortenson's 1998 annual salary was established to be
$214,500.

Mr. Mortenson's 1998 incentive compensation, however, was earned on the
basis of a different formula from that of the other Named Executive Officers.
Mr. Mortenson was awarded 43.1% of his base salary in bonus based upon his
achievement of MBOs. In addition, Mr. Mortenson's bonus was determined under a
formula whereby he could be awarded a bonus equal to 12.5% of his base salary in
the event the Company achieved 85% of the pre-established financial and budget
objectives (0% below 85% performance). For every percentage point by which the
Company exceeded 85% of the established financial and budget objectives, which
could be subjectively adjusted by the Committee for unusual circumstances, the
percentage of the applicable portion of his base salary subject to the bonus

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<PAGE>
was increased by 2.23 percentage points. Mr. Mortenson's total incentive
compensation in 1998 was $427,928 or 199.5% of his base salary.

In December 1997, the Company provided Mr. Mortenson with a $90,000 loan to
assist him in the acquisition of his new residence in North Carolina. The loan
bears interest at prime plus 1% was originally due at the earlier of the date of
sale of his Chicago residence or one year. The maximum term of the loan has now
been extended through December 1999. The loan is secured by a second deed of
trust on his North Carolina residence.

The Stock Option and Executive Compensation Committee Report is presented
by the members of the Committee:

Nathan H Dardick
Clyde Wm. Engle
C. Alan Forbes, Chairman
Joseph C. Minio
Michael R. Stroll

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during the fiscal year ended December 31, 1998 and
Forms 5 and amendments thereto furnished to the Company with respect to the
fiscal year ended December 31, 1998, and any written representations from a
reporting person that no Form 5 is required, to the best of the Company's
knowledge, no person who was a director, officer or beneficial owner of more
than ten percent of any class of equity securities of the Company (a reporting
person) failed to file on a timely basis, as disclosed in the above Forms,
reports required by Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") during the most recent fiscal year.

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<PAGE>

[Letterhead of Willaim Blair & Company, L.L.C.]

Annex II

November 8, 1999

Board of Directors
Alba-Waldensian, Inc.
Box 100, 201 St. Germain Ave., S.W.
Valdese, North Carolina 28690

Gentlemen:

You have requested our opinion as to the fairness, from a financial point of
view, to the Stockholders (other than Clyde Wm. Engle, Nathan H. Dardick, and
Tefron, Ltd., or any of their respective affiliates) of Alba-Waldensian, Inc
("the Company") of the consideration to be received pursuant to the terms of the
Agreement and Plan of Merger dated as of November 8, 1999 (the "Merger
Agreement") by and among Tefron U.S. Holdings Corp. ("Parent"), AWS Acquisition
Corp. ("Purchaser"), a wholly-owned subsidiary of Parent, and the Company.
Pursuant to the terms of, and subject to the conditions of, the Merger
Agreement, Purchaser will make a tender offer (the "Tender Offer") at $18.50 per
share for all of the outstanding shares of the Company (the "Consideration").
Following consummation of the Tender Offer, Purchaser will be merged with and
into the Company in a merger ("Merger") in which all of the outstanding shares
of the Company (other than shares owned by Parent, Purchaser or the Company or
their subsidiaries) will be converted into the right to receive the
Consideration (the transactions pursuant to the Merger Agreement are
collectively, the "Transaction").

In connection with our review of the proposed Transaction and the preparation of
our opinion herein, we have examined, (a) the Merger Agreement; (b) audited
financial statements of the Company for the three fiscal years ended December
31, 1998; (c) the unaudited quarterly financial statements of the Company for
the periods ended April 4, 1999 and July 4, 1999; (d) certain internal financial
information and forecasts for the Company, prepared by management of the Company
and (e) certain other publicly available information on the Company. We have
also held discussions with members of the senior management of the Company to
discuss the foregoing, and have considered other matters which we have deemed
relevant to our inquiry.

Although we have no reason to believe that any of the financial or other
information on which we have relied is not accurate or complete, we have assumed
the accuracy and completeness of all such information and have not attempted to
verify independently any of such information, nor have we made or obtained an
independent appraisal of the assets of the Company. With respect to financial
forecasts, we have assumed that such forecasts have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. We
express no opinion with respect to the financial forecasts or the estimates and
judgments on which they are based. Our opinion herein is based upon economic,
market, financial and other conditions existing on, and other information
disclosed to us and that can be evaluated as of, the date of this letter. It
should be understood that, although subsequent developments may affect this
opinion, we do not have any obligation to update, revise or reaffirm this
opinion. We have relied as to all legal matters on advice of counsel to the
Company. In rendering our opinion, we have assumed that the Transaction will be
consummated on the terms described in the Merger Agreement, without any waiver
of any material terms or conditions by the Company. We were not requested to,
nor did we, seek alternative participants for the proposed Transaction.

<PAGE>

In conducting our investigation and analyses and in arriving at our opinion
expressed herein, we have taken into account such accepted financial and
investment banking procedures and considerations as we have deemed relevant,
including (a) historical revenues, operating earnings, operating cash flows, net
income and capitalization, as to the Company and certain publicly held companies
in businesses we believe to be comparable to the Company; (b) the current
financial position and results of operations of the Company; (c) the historical
market prices and trading volume of the Common Stock of the Company; (d)
financial information concerning selected actual and proposed business
combinations which we believe to be relevant; and (e) the general condition of
the securities markets.

Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is not a recommendation to the
Company's Stockholders with respect to the Transaction.

William Blair & Company has been engaged in the investment banking business
since 1935. We undertake the valuation of investment securities in connection
with public offerings, private placements, business combinations, estate and
gift tax valuations and similar transactions. In addition, the Company has
agreed to indemnify us against certain liabilities arising out of our
engagement.

Based upon and subject to the foregoing, it is our opinion as investment bankers
that, as of date hereof, the Consideration to be paid to the Stockholders of the
Company in the Transaction is fair, from a financial point of view, to such
Stockholders.

Very truly yours,

-------------------------------
WILLIAM BLAIR & COMPANY, L.L.C.

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